GlobalGear Ltd: Market Entry Mode and Political Risks in Latveria

This report provides recommendations for GlobalGear Ltd. on entering the Latverian market, evaluating various entry modes such as direct exporting, licensing, joint ventures, and strategic acquisitions. It analyzes the legal system in Latveria, highlighting the complexities of customary law and the importance of a simplified legal framework for attracting foreign investment. The report also discusses the political risks GlobalGear Ltd. needs to monitor, including political instability, labor laws, currency valuation, trade barriers, environmental regulations, and international conflicts. The analysis emphasizes the need for GlobalGear to navigate these challenges to successfully establish and operate in the Latverian market. The report offers insights into mitigating these risks and adapting to the specific conditions of the Latverian market, providing a comprehensive overview of the challenges and opportunities GlobalGear faces.

TABLE OF CONTENT
Question 1........................................................................................................................................1
recommendation to GlobalGear Ltd. for an entry mode to use when entering the Latverian
market..........................................................................................................................................1

Question 1
recommendation to GlobalGear Ltd. for an entry mode to use when entering the Latverian
market.
There are many entry modes which GlobalGear Ltd can use while entering in Latverian market
some of them are as follows:
Direct exporting:
It is famous and easy method while entering international market. As company can direct export
its goods and services to other global market. It is considered as the fastest mode when entering
the oversea market. As GlobalGear Ltd has seen that there is the demand of mattress in the
Latverian market. As company can opt this option of suppling products to the importer rather
then establishing retail store in the international market. This option is the cost effective option
as there is no need for company to establish factory or store in global market. As online sales is
also the option but company should have not adopt that as in latveria majority of mattress sales
happens via physical retail store and it has observed that only 23% of sales are happening
through online websites. The another reason why company should ignore delivering online
mattress in latveria is the lengthy delivery time and companies are doing marketing which is
concentrated on physical stores only. As this mode of entry will take more time for offline
product and less time for online but preferring online mode is of no use in latverian market.
Licencing and franchising:
This is the another most famous entry mode. This option comes with less risk. This strategy will
allow other business taking the risk on behalf of other company. In the licencing agreement, the
oversea business will use the company’s brand name, products, intellectual property, trademarks
etc. and will pay royalty and commission to them. Here the franchisee will take all risks and have
to bear all losses. As the licensee will share the portion of the profits with the brand. It requires
low cost when have to enter in the foreign market. Licencing partner have complete knowledge
and understanding about the local market. Through this mode global gear ltd will get continuous
source of income. It also helpful in eliminating or reducing the political risks because the
franchising partner is the domestic or local business. With less investment it allows company to
expand in many regions. It has some limitations also like there are some cases in which company
does not have complete control on franchising. Here the reputation of brand is on stake. As
incompetence of the licencing can tarnish or destroy brand image in the oversea market.
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Joint venture:
Global gear ltd can also opt for joint ventures if they wish to expand in international market.
With the local business they can do joint venture. Here both the partners in the joint venture will
share risks and rewards of the business. Along with that businesses will share costs, capital,
losses etc. this mode of entry is also suitable for those country which do not allow 100 percent
foreign ownership then in this case if foreign company want to enter in that market then they can
become joint venture partners with local company. In this mode the biggest advantage is both
partners will enjoy growth and expansion. It is found that in the joint venture the political risks is
also low because there is the presence of one local partner. Each partner firm will enjoy each
others intellectual property, knowledge, expertise, assets etc. although joint ventures can bear the
issue of cultural clashes within the company. If there is the happening of dispute then the
dissolution of joint venture is the complex legal procedure.
Strategic acquisition:
It means when company acquire control in the existing company in the global market. It means
when company direct or indirect involve in giving same products or items to the global market.
Although company can retain the management of the newly acquired organisation so that
advantages can be get from its expertise, experience and knowledge when company will started
operating. It has the biggest advantage that the business will not start from starting as it has
already made infrastructure. Distribution channels, facilities and the consumer base. It will be
very beneficial for company as company will no longer have to invest in the foundation of the
business because they will get knowledge and expertise and also will established infrastructure
of the existing business. It is considered as the rapid mode of entry in the global market on the
large scale. Here it can find that there are possibility of having cultural clashes as both
organisations belongs to different culture. In the strategic acquisitions it has observed that
technological procedure difference is also the famous and common problem.
2. different considerations that GlobalGear Ltd. will need to monitor in Latveria relating to legal
systems
Global gear ltd which is the company of south korea and there they have civil law system which
have high predictability. While latveria has the mixed legal system where there is the existence
of national common law system and is other regions it can be found that there exists customary
law. The customary law is not easy and complex and based on local customs and practice. Those
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laws are not easy to determine which is based on customs because it is not the standard law. This
law is mainly relevant to family law and zoning or other business operations. It is always seen
that latveria has the practice of having complex laws and those laws are very difficult as it cannot
be understand easily. It someone wants to understand the laws then they require expensive
lawyers services so that can come out from the severe corruption and to get positive court
judgements. Latverian government should have eliminate customary laws and should have come
up with standard laws which can be easily understandable by everyone. Laws should have made
by the country which can be understand by layman also because complex laws is not the cup of
tea for everyone. As many foreign company will do business in the country so laws should be
like that which anyone can understand. Although the current government of the country is very
busy in making the legal system simple but it is found that mixed results are obtained from it. So
government should have also increase their efforts and should have quickly come up with
simplified legal system. There is the benefit of simple legal system that it will attract many
foreign countries. As international company want to do business in such countries where the
legal system is simple. This will increase latveria economy. As the country will witness
economic development because many foreign countries will enter in the market if they simple
their legal system. International company will also provide employment to the citizens of that
country. It will also help government in reducing the rate of unemployment from the country.
Global gear ltd halso have to deal with customary law if they want to operate in that country. As
this law is hard to understand so they have to appoint lawyer from latveria who can handle all
legal systems or issues of the company. Rule of law means the law which is influenced by the
society. The law states the every and each individual in the society must have considered equal.
And no discrimination must have done on the basis of colour, age, gender, religion, caste etc. as
the country can grow only if they will stop discriminating and started treating everyone equal as
everyone is equal in the eyes of law and there must be never discrimination. As per this rule
every person is the subject to law which include all the people. Rules are there for everyone so
each and every person must have to follow it. And no one can deny to follow the rule. In the
democratic country one can find pit the lack of the rule of law. Rule of law can be helpful in
many situations when the government have inefficient or fails to solve anything. As rule of law
have comes with the guidelines so that can applied to any situation and they also solve any
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situation. This can also helpful in solving corruption and is such situation where solving the
corruption is becoming major issue.
3. discuss the different Political Risks that GlobalGear Ltd. will need to monitor in Latveria
There are many political issues or risks which global gear ltd have to face in latveria. Although
latveris have stable political system but have some political risks also like in the past it has
observed that political upheaval has resulted in the economic crisis and it is also noticed that the
current government also has faced opposed by the army. It is the biggest question that why the
army has opposed them and that can be easily found that the opposition which they had found is
because of wrong decisions which are taken by the government of latveria. Political risks are the
risks which are obtained by the decisions which are taken by the government. If the government
will take decisions and that will not in the favour of company then they have to face high loss.
Taxes, currency valuation, investment, labour laws regulations etc can be arise through various
government decisions. Labour law is the important thing as company have to pay the standard
wage which is given by the government and if they pay less then authority can impose such
company and this can also low the profit margin of the company. If government will say that
company have to pay hogh wage to the labour then that will definitely affect their profit margin.
Currency valuation can also affect the sale and revenue of the company like if the currency value
will decrease in particular country then the revenue and profit of the company will also decrease.
Sometimes it is painful for the company because they dis not get the expected profits or revenue.
Trade barriers is the other problem which the company can face. To promote their domestic
business government imposed trad barriers which means that foreign companies cannot enter in
their country. Then this will become problem for foreign companies if they want to enter in those
countries as how they will enter. Environmental regulations is also the other issues, as business
have to take their business practice is such manner that does not affect the environment. As
environment is very important so it should have not been destroyed. Business should have take
care that how they are doing their business practice. Business activities should not have pollute
the environment or increase global warming. As no country will allow such business or company
to operate in their country who will damage the environment. So global gear ltd should have also
take care that they do not pollute the environment in any manner. As environment is the vital
thing and it should not have pollute by the business or any one. Customers will also does not
purchase goods and services from those companies which harm the environment from their
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business activities. International wars is also the political risks as if there is war between the
home country and in that country where company want to enter. Then there the entry of company
will be impossible. So international war is also harmful for the company and it hinders nosiness
expansion. So if company has identified any good market share in that country then how they
will expand because of the tension between both the countries. So before planning for expansion
company should have also see that they enter in those countries where there is no tension within
them. Global gear ltd can also enter in latveria because t=it is found that there are no tensions
between both the countries.
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